Question : The process of converting assets into cash is called ___________.
Option 1: Liquidation
Option 2: Accumulation
Option 3: Expenditure
Option 4: Saving
Correct Answer: Liquidation
Solution : The correct answer is (a) Liquidation.
The process of converting assets into cash is called liquidation. Liquidation typically occurs when a company or individual needs to sell off their assets to generate cash to meet financial obligations or to wind up business operations. It involves selling off assets such as property, equipment, inventory, or investments to convert them into cash, which can then be used to pay off debts, distribute to shareholders, or fulfill other financial obligations. Liquidation can be voluntary, such as when a business chooses to close down, or it can be involuntary, such as when a company undergoes bankruptcy proceedings.
